Shutterstock to Pay $35 Million to Settle FTC Allegations Over Illegal Subscription and Cancellation Practices

Shutterstock Inc. will pay $35 million to settle Federal Trade Commission allegations that the online digital photo and video platform illegally made tens of millions of dollars from a range of unfair and deceptive practices, including charging consumers for products without their informed consent and making it difficult to cancel subscriptions.

"Subscription and negative option features can be beneficial for both companies and consumers, making renewal simpler and streamlining payment processes," said Christopher Mufarrige, Director of the FTC's Bureau of Consumer Protection. "But these benefits depend critically on firms clearly disclosing material terms, securing express and informed consent before charging consumers, and ensuring cancellation is a straightforward and simple process. When firms fail to follow these simple principles, they deprive consumers of the ability to make informed choices, undermining consumer sovereignty and impeding competition. The Commission's action today underscores its commitment to preserving consumer choice and facilitating competition in digital markets and subscriptions."

New York-based Shutterstock licenses stock photos, graphics, videos and music clips that consumers can pay to use. Since at least 2020, the company has offered most of its content through online subscriptions, which allow consumers to download a specified number of pieces of content per month and retain a license to use the content for a set time.

Consumers subscribe to Shutterstock's products online, either by going to the company's website or by clicking on advertisements that allow users to subscribe to specific products. The company offers several plans for licensing content on its website, including annual paid-up-front (APU) and annual paid monthly (APM) subscriptions and on-demand "packs." The Commission alleged that Shutterstock failed to disclose important information about the terms of these plans.

According to the agency's complaint, Shutterstock advertised its on-demand packs as "Best for a one-time project," with "no commitment," but failed to adequately disclose that these packs automatically renewed when the last download in the pack was used and-until early 2024-that they automatically renewed after one year.

The complaint further alleges that the "plan selection" page of Shutterstock's desktop APM enrollment flow frequently failed to clearly disclose material terms of the APM plans including that the plans will automatically renew at the end of each year and that consumers will be charged a fee to cancel an APM plan before the end of the term. Shutterstock often buried such details in difficult-to-find fine print, the complaint alleges.

The FTC's complaint charged Shutterstock with:

• Failing to clearly and conspicuously disclose material terms before billing. Shutterstock failed to disclose the renewal terms, what cancellation fees applied and when, and the amount of the fees.
• Failing to obtain consumers' express informed consent. Shutterstock failed to get consent to charge consumers' credit cards before charging them for subscriptions and content packs.
• Failing to provide simple cancellation mechanisms. Shutterstock has failed to provide simple means for consumers to cancel their subscriptions. For example, before 2024, consumers could not complete early cancellation online and were required to contact customer support by phone, chat, or email, all of which were a complicated and time-consuming process.

Under the FTC's proposed order, Shutterstock will pay $35 million, which will be used to provide full relief to the consumers harmed by Shutterstock's illegal billing and cancellation practices. The proposed order also prohibits Shutterstock from misrepresenting material terms of its subscription offerings and requires it to disclose material terms of its subscription offerings, obtain consumers' express informed consent to charges and maintain simple cancellation mechanisms for negative option features.

The Commission vote authorizing staff to file the complaint and proposed order was 2-0. It was filed in the U.S. District Court for the Southern District of New York.

The Commission staff on this matter are Nicole Conte and Edward Hynes in the FTC's Southwest Region.

NOTE: The Commission files a complaint when it has "reason to believe" that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.